Key Takeaways
- Shares of CRDO tumbled 21% to $163.83 even after surpassing fiscal Q1’27 earnings and sales projections.
- The company reported adjusted earnings per share of $1.20, exceeding the $1.17 consensus; sales reached $479 million versus $473 million forecasted.
- Forward guidance calling for $525M-$535M in Q2 revenue failed to meet heightened investor expectations.
- J.P. Morgan reduced its target price from $335 down to $310; Bank of America lowered its outlook from $340 to $275.
- From a technical perspective, shares have declined approximately 40% from the 2026 peak of $308.30, with analysts warning of potential additional weakness.
Shares of Credo Technology Group plummeted 21% during Wednesday’s session, settling at $163.83 in afternoon activity, following a Tuesday evening earnings announcement that generated lukewarm responses from Wall Street analysts despite the company exceeding quarterly benchmarks.
Credo Technology Group Holding Ltd, CRDO
During the fiscal first quarter that concluded on August 1, the semiconductor firm delivered adjusted earnings per share of $1.20, surpassing analyst projections of $1.17. Total revenue reached $479 million, beating both the Street consensus of $473 million and the upper boundary of management’s guidance at $475 million. Compared to the same period last year, revenue surged 114.7%.
The company’s GAAP gross margin expanded to 64.5%, while GAAP net income reached $129.4 million, representing an increase from $64 million in the prior-year quarter. Sequentially, however, net income declined from the $169 million figure reported in fiscal 2026’s fourth quarter.
Chief Executive Bill Brennan highlighted that the firm’s “portfolio now spans connectivity from millimeters to kilometers,” encompassing both optical and copper solutions designed for artificial intelligence data center infrastructure.
Looking ahead to the current quarter ending in October, management projected revenue in the range of $525 million to $535 million.
Analyst Community Expresses Reservations
The forward-looking revenue projection disappointed market participants. J.P. Morgan’s Joseph Cardoso trimmed his target from $335 down to $310, noting that the “raised outlook is likely to disappoint,” especially regarding optical revenue expectations. “Investors and we alike had been anticipating more material upside,” Cardoso explained.
Bank of America preserved its Buy recommendation but dramatically reduced its price objective from $340 to $275, citing deceleration in Credo’s copper cable segment despite ongoing expansion in optics.
Mizuho maintained its Outperform stance and encouraged clients to “buy the pullback,” though analyst Jordan Klein conceded that both the revenue performance and forward guidance appeared “a bit skinnier” relative to previous reporting periods.
The market’s negative response underscores how CRDO had been trading at elevated expectations. The stock had climbed to a year-to-date peak of $308.30 earlier in 2026 before Wednesday’s selloff drove shares into the $160 range. This represents a decline of nearly 40% from recent highs.
Elevated Valuation Multiples Intensify Selling
Valuation metrics have also contributed to the selling pressure. Despite the recent decline, Credo continues to trade at a forward price-to-earnings multiple of approximately 45 times on a GAAP basis. The broader technology sector median stands at 29, positioning CRDO significantly above comparable companies including Dell and Nvidia by this measurement.
From a technical analysis standpoint, the stock has breached both its 50-day and 100-day exponential moving averages. Chart patterns reveal a double-top formation near the June peak levels, a configuration commonly associated with continued downward pressure. The next significant support zone to monitor is the 61.8% Fibonacci retracement level around $171.
The company manufactures copper active electrical cables and optical digital signal processors that facilitate connections between AI servers and networking switches within data center environments. Its customer base includes Amazon, Microsoft, and SpaceX, all of which have committed to expanding their data center infrastructure investments.
During Wednesday’s premarket session, CRDO shares had already declined more than 9%, touching their lowest point since July 30.
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